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Speaking notes for Mr. Hubert T. Lacroix, President and CEO, CBC/Radio-Canada, at the Academy of Canadian Cinema and Television

May 22, 2008

(Please check against delivery)

A New Contract in a New Environment

Thank you very much, France.

Mr. President,

Dear friends,

Good afternoon. First off, I’d like to warmly thank the Academy for inviting me to lunch with you here today. I’m really pleased to be here today with you, our partners, to speak publicly for the first time as CBC/Radio-Canada’s President and CEO.

I’ve been on the job for 18 weeks now. People often ask me: “So, Hubert, how’s it going over there? Are you bored yet?”

I reply to them by reeling off a few things that have happened in my own life and CBC/Radio-Canada’s since my arrival on January 2.

First of all, there was my inaugural tour of some of our facilities, during which I met close to 1,500 employees. I must say, I was highly impressed by their commitment to our organization, as well as their dedication and passion for what we produce every day, along with the role that we play.

Then there was (i) our transaction with TQS (which followed the announcement that we were disaffiliating in the Trois-Rivières, Sherbrooke and Saguenay markets);

(ii) Claude Dubois’ comments and the fallout from the Canadian Songwriters Hall of Fame Gala;

(iv) the Standing Committee on Canadian Heritage tabling its report on the review of our mandate;

and finally, (v) my appearance before this same Committee to present CBC/Radio-Canada’s plans and priorities.

All of this and I’ve not yet mentioned the issues and controversies that arose on the CBC side, like,

(a) the changes to Radio 2 programming and our decision to disband the CBC orchestra; and (b) the decision in January to outsource the marketing of distribution rights to selected CBC properties in international markets.

And everything I’ve just listed happened in 18 weeks, not 18 months!

Maybe now you know why I always end up telling my friends: “Working at CBC/Radio-Canada is anything but dull”!

When I first considered accepting the job of President & CEO, I thought I knew the extent of our public broadcaster’s activities. Upon doing my due diligence, though, I soon realized that wasn’t the case! Allow me to give you an overview of what I discovered:

[Video]

So you can see just how vast our Corporation is! With 29 different services, some ten thousand employees working across the country, 13 unions representing nearly 90% of these employees, hundreds of thousands of hours of programming aired on all our platforms each year, and four million monthly visitors to our websites. I repeat: “My job is anything but dull!”

In addition, I’m walking into our company at a key moment in the public broadcaster’s history. We are now living in a world of high-definition TV, digital broadcasting, sprawling media empires and, above all, ever-emerging new platforms. This poses serious challenges to our existing business model, forcing us to rethink our strategies.

To give you an idea of the enormity of the changes on the horizon, Mark Thompson, the President of the BBC—an organization that some enjoy comparing to ours, even though it has four times our budget—recently announced that the BBC’s annual Web-related budget would be jumping from 200 million to 800 million US dollars. Imagine! The BBC will now be investing 800 million dollars a year to support its Web strategy!

To help you put this figure into perspective, the CBC’s total annual budget, for an organization that broadcasts in two official languages and five different time zones, is only 1.7 billion dollars, all revenue sources combined.

In a similar vein, this past Friday, CBS Corporation announced its acquisition of CNET Networks Inc. for 1.8 billion US dollars in an effort to double the traffic on its website. Further to this transaction, nearly 63 million people will visit CBS-owned websites each month.

(PAUSE)

Since January 2, all of my in-house initiatives have been focused around what I call my three P’s: people, programs and pushing forward.

The people, of course, are our staff. We must continue to capitalize on the talent and expertise of our creators and broadcast artists, while substantially changing our business relationship with them. This relationship must be open, transparent, much simpler and committed—which naturally implies a major push to transform our relations with the unions. I don’t think it will be possible for us to survive, let alone stand out from the competition, if our labour relations are characterized by conflict, disrespect and failure to deliver on commitments.

But the people are also you, our partners, with whom we want—and must—create a new brand of television. This brings me to my second “P”: programs.

Over the past three years, Radio-Canada has invested an average of 75 million dollars in independent producers such as yourselves. That represents nearly 950 hours of programming per year. You, in return, employ hundreds of producers, scriptwriters, performers, actors and technicians. There can be no doubt, therefore, that Radio-Canada plays a pivotal role in the Canadian television industry.

The balance between in-house and independent production will always be a sensitive issue. But contrary to what you may have heard from this podium about six months ago, I can assure you that CBC/Radio-Canada is, and will remain, a broadcaster that invests in independent production.

We will, however, have to redefine our partnership. Indeed, to better play our pivotal role and maintain our support for independent producers, we must be able to acquire and exercise ownership rights over content delivered to a much wider audience than in the past. This will ensure us an ongoing presence on the full range of platforms available in the 21st century.

Weakened public broadcasting breeds weaker independent production. Nobody in our industry stands to gain from the public broadcaster being confined to a marginal TV role, cut off from the citizens it’s supposed to be talking to.

I am confident that our discussions to this effect with get under way shortly with you, the APFTQ, and eventually lead to a fair sharing of these rights.

This idea also falls under my third “P”—pushing forward; that is, the need to evolve the organization so that it can stand out on the media landscape in the coming years.

(PAUSE)

In March 2007, the Standing Committee on Canadian Heritage began an intensive review of CBC/Radio-Canada’s role and mandate. Then, this past February 28—the same day that my daughter, Margaux, decided to come into the world!—the Committee delivered its final report.

Today I want to stress the urgency of implementing the recommendations contained in this report, especially the one about ratifying a seven-year memorandum of understanding between the federal government and CBC/Radio-Canada. We’re talking about an agreement that would define the mutual obligations of the Corporation and government.

As part of this agreement, the Committee recommends stable, multi-year funding indexed to the cost of living, over the life of the memorandum. In my opinion, it’s a fundamental recommendation that will enable CBC/Radio-Canada to remain a strong, relevant organization.

This document will clarify for all Canadians the services we will provide and the resources necessary to deliver them, and it will allow us to meet Canadians’ expectations. It will enable CBC/Radio-Canada to evolve as a critical cultural institution in this country—according to the needs and objectives identified for it by Government and Parliament—and making us clearly accountable for the commitments we will have made.

This longer-term horizon would finally enable us to plan our activities and services over more than 12 months (our current funding cycle) and to link our strategic objectives to our resources over the life of the MOU.

This agreement would obviously have a positive impact on you as well. Because if we could plan our activities over the longer term and make commitments beyond a single year, the entire independent-production community would benefit.

We therefore need you, our partners, to support this MOU and impress on the government the urgency of acting on it immediately.

It seems logical and essential that this tool be in place and fully negotiated by the time we appear before the CRTC in fall 2009 to renew our licences. If not, we will be wasting time and money by not paying heed to Parliament’s priority action areas.

(PAUSE)

As you know, we have a number of funding-related challenges. Let me put these in perspective for you.

Between 1995 and 2004, federal government support for CBC/Radio-Canada fell by 9%, while allocations to the arts in general, excluding the amounts given to the CBC, rose by 39%. For us, this represents a shortfall of 134 million dollars. The last permanent increase in our basic funding goes back to 1973. In addition, our parliamentary appropriation isn’t fully indexed to the cost of living.

Incidentally, in its recommendations, the Heritage Committee suggests that our basic funding be increased from $33 to $40 per Canadian. If this recommendation were adopted, it would guarantee us an additional 215 million dollars. If you want to know what I think about this, I’d say “It’s not a bad start!”

The Committee also found that in a perfect world, CBC Television and Télévision de Radio-Canada should be made less reliant on advertising. But it acknowledges that in the current environment, we don’t have a choice: we need advertising revenue.

So, even though we’re a public broadcaster, we are currently obliged to rely on advertising income to keep a balanced budget and, as a result, must pay attention to ratings. Claiming otherwise would be misrepresenting our day-to-day reality.

We understand the direct link between these ratings and our challenge of attracting 300 to 350 million dollars in advertising revenue each year, across all of our platforms. And, to be honest, we actually like the discipline these ratings impose on us, because it helps us ensure that we’re delivering the services and programming Canadians want.

(PAUSE)

How can we claim to be relevant to the lives of our audiences if nobody watches us or uses our services?

Clearly, ratings cannot be the sole yardstick of our performance. In fact, that’s where the Committee’s suggested MOU takes on its full importance. Because in specifying the services we would be committing to deliver, we would also be specifying our performance indicators.

You can also understand why we insist on keeping our 37% envelope from the Canadian Television Fund. The Fund being one of the best tools for promoting Canadian programming, it represents a fundamental resource for us, one that allows us to work with you—the independent creators and producers—to keep on delivering innovative, varied, high-quality programming and grow our audiences. Here once again, our interests are aligned.

CBC/Radio-Canada is also fighting for access to subscriber revenues. Among other things, we could use these revenues to protect the level of Canadian content in our programming and further invest in high-volume drama series. As you well know, these series play an important nation-building role in our society, but are threatened by spiralling production costs.

The issue of the national public broadcaster’s funding is therefore a crucial one, and affects you directly.

(PAUSE)

Over the past 50 years, we have worked together to build a creative, high-performance media environment that clearly serves our society well. It’s a major accomplishment and one we should be proud of. Every day, CBC/Radio-Canada defines itself by enriching the cultural and democratic life of Canadians, promoting social cohesion, and entertaining the public.

Throughout my career, I’ve always tried to reach a consensus—to bring people together so that their energies can be channeled into concerted action.

Over the next five years, I’ll make sure that we work together to build bridges that will allow us to achieve what we set out to do.

In the meantime, I invite you to begin thinking about how we can chart the path ahead.